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Anoop Verghese Joyson Fernandes Nishi Francis Ravi kant Gupta Roshan Kumar Soni Tiru


Planning is the essense of all managerial functions.


Budget acts as an instrument of co- ordination.


Budget are the most important tools of profit ,planning & controlling.


Since plans are framed to achieve better results

According to CROWN & HOWARD


is a pre-determined statement of management policy during a given period ,that provides a standard for comparison with the results actually achieved.

It involves the following aspects:

1)The objects are set by preparing budgets. 2)The actual figures are recorded. 3)The actual and budgeted figures figures are then compared for studying the performance of different cost centres. 4)In case actual performance is less then the budgeted norms, a remedial action is taken immediately.




1) 2) 3) 4) 5) 6) 7) 8)

It ensures planning, on a long term basis. Its a tool of anticipating the requirements and expected performance of any firm. Co-ordinating activities of different departments. To efficiently operate different cost centres and departments. Elimination of wastes and increase in profits. To centralise the control system. Correction of deviations from the established standards. Fixation of responsibility of various individuals in an organization.

1)Involvement of each and every person 2)Proper fixation of authority and responsibilty 3)Targets should be realistic 4)Good system of accounting 5)Should have the support of top management 6)Employees should be imparted budgeting education 7)Proper reporting system

Clarifying Proper Proper Budget


delegation of authority and responsibility communication system education

Participation Flexibility Motivation

of all employees

Organization for budgetary control Budget centres Budget officers Budget manual Budget committee Budget period Determination of key factor

Maximisation Co-ordination Specific

of profit

aims Tools for management performance Economy Determining weakness Corrective action Consciousness Reduces cost Introduction of incentive schemes

Uncertain future Budget revisions

Discourages efficient persons

Problem of co-ordination Depends upon support of top management
Conflict among departments


According to time

On the basis of function

On the basis of flexibility

Long term Short term current

Operating (sale, Purchase, production Financial (I/E statement)

Fixed budget Flexible budget

Long Short

term budget term budget budgets


o Operation
Programme Responsibility


Finanacial Master




is a summary of various functional budget Used to co-ordinate the activities of various functional departments and also to help as a control device Prepared by integrating various budget into one consolidated budget so as to represent the budgeted P&L a/c and the balance sheet


budget budget


Cash The

of production budget

projected income statement & balance sheet

Fixed budget (Prepared before the beginning of a financial year for a given level of activities)

Flexible budget (Defined as a budget which by recognising the difference between the fixed, semi-fixed and variable cost)


is a monetary or/and quantitative expression of business plans and policies to be pursued in future.


is needed for future planning and budgeting, it is also well-educated guess or inference as to what the future may be.

Are planned events.

Are merely welleducated estimate.

Budgeting begins when It provides logical forecasting ends. basis.

Budget provides a standard result. It represents merely a probable event.

The production budget is prepared in relation to the sales budget. What is to be produced?

When is it to be produced?

The preparation of production budget involves the following stageProduction planning Consideration of plant capacity Stock quantity to be held Considering sales budget


budget is an estimate budget of expected sales during a budget period. A sales budget is known as a nerve centre or backbone of the enterprise.


are 6 points Past sales figures Assessment and reports by salesman Availability of raw material Seasonal fluctuations Availability of finance Plant capacity

cash budget is an estimate of cash received and disbursements during a future period of time.